Wealthy Indonesians snap up government bonds as yields near 8%: OCBC - The Business Times

[JAKARTA] Wealthy Indonesian investors are seeking to lock in government bond yields approaching 8 per cent, with OCBC Indonesia’s bond assets under management (AUM) rising 12 per cent year on year as at September.

Government bonds remain the most popular investment product among the bank’s wealth management clients, said Diamond Stole, OCBC Indonesia’s head of wealth management advisory, in an interview on Tuesday (Nov 3).

He was speaking to The Business Times on the sidelines of a 2027 outlook forum for clients, held at The Westin Jakarta.

“They can lock in quite (a) high yield right now,” he said.

Yields on Indonesia’s benchmark 10-year government bonds stood at around 7.75 per cent on Tuesday, up about 156 basis points since the start of the year, according to data from the Asian Development Bank.

While higher bond yields offer opportunities for investors, bond prices move inversely to yields. Those selling before maturity could face losses if yields rise further, while overseas investors face currency risks.

Bank Indonesia (BI) raised its benchmark interest rate by 100 basis points to 5.75 per cent between May and June to support the rupiah, and has since held it steady. It also raised its overnight deposit rate in October to support currency stability.

The rupiah has fallen about 8 per cent against both the Singapore dollar and US dollar this year. Its weakness, coupled with elevated energy prices and shifting global interest rate expectations, has pushed up the yields that investors demand for Indonesian government debt.

OCBC expects BI to raise interest rates once more, although its chief economist Selena Ling said the central bank could afford to wait.

“We still have one hike pencilled in for BI, but I would say that they may just wait and see for a while,” she said at a media briefing on Tuesday. “There’s no pressure to do so in the short term.”

The bank also expects the US Federal Reserve to raise rates by 25 basis points in December before entering a prolonged pause.

Ling said financial markets may be too aggressive in pricing further increases next year, particularly if energy prices ease and inflation begins to moderate.

For Indonesian savers, a future decline in deposit rates could make government bonds more appealing.

Stole said he expects more investors to move from time deposits into government bonds when interest rates begin to fall, as they seek to preserve the yields available on their investments.

The growing demand for bonds comes as Indonesia’s wealth management clients increasingly embrace digital investment channels.

At OCBC Indonesia, the value of digital bond transactions in 2026 reached 5.8 trillion rupiah (US$320.5 million) as at September, compared with 2.9 trillion rupiah for the whole of 2024.

Digital channels accounted for 62 per cent of the bank’s investment transactions as at September, up from 47 per cent in 2024. Their share of total investment transaction value also rose from 11 per cent to 22 per cent.

Stole said the bank was seeing more younger investors seeking personalised advice and convenient digital access to investment products.

Beyond government bonds, affluent Indonesian clients are also exploring foreign currency investments, including those denominated in US dollars, Singapore dollars and Japanese yen.

The bank did not provide percentage growth figures for its clients’ foreign currency holdings, though Stole said it was “too early” to determine whether offshore investments were increasing significantly.

OCBC had also not observed a clear link between recent stock market volatility and changes in clients’ portfolio allocations, he added, with investment decisions continuing to be guided by longer-term financial goals.

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